I am at a complete loss here. The user definitely exists on the system as the user is in /etc/passwd and I can su to that user as root without issues. However the user cannot login via SSH or right on the machine itself.

Update:
- More frustrating. If I try deactive the shell user then reactivate it is clear in auth.log that the password is udpated for that user, no errors. I can now login directly but SSH is still broken.
- What other info can I share to held shed light on this problem?

Not entirely sure why but here is where it stands:
- all shell users made cannot be used immediately. Have to deactivate the user then reactive the user, forcing the password update.
- have to manually add the user to sshusers group (adduser foobar sshusers)
- /etc/ssh/sshd_config is required to have AllowGroups sshusers set. This appears not to be set by default.